Service recovery paradox

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The service recovery paradox is the result of a very positive service recovery, causing a level of customer satisfaction and/or customer loyalty even greater than that expected if no service failure had happened. The term was coined 1992 by Michael McCollough and Sundar Bharadwaj,[1] who defined service recovery as "... a situation in which a consumer has experienced a problem which has been satisfactory resolved, and where the consumer subsequently rates their satisfaction to be equal to or greater than that in which no problem had occurred".

A customer takes his family to Disney World every other year. One year, he books a package including hotel and tickets. The family arrives at the hotel in the late afternoon, and wants to see an evening performance- that last one before the act goes to Europe. But no one at the hotel has their tickets, and the ticket offices are closed. The family visits the Customer Service Representative at the park, who immediately provides four passes for that evening. After he gets home, the customer writes a letter, thanking Disney for the way the incident has been handled, and suggesting that the hotel ticket office stay open later to avoid frustration in the future. In response, he receives an apology and four 7-day admission tickets worth $750. He is delighted. A few weeks later, he receives a full refund for the tickets they had bought for the trip – since their experience had been less than wonderful, Disney wanted to refund their money. The customer is elated – even more happy than he would have been if there had been no error in the first place. He – and tells all his friends about how great Disney is, and writes about it online.[2]

Empirical tests of the effect showed mixed results.[3] One study concluded that the effect was most likely to occur when a number of conditions were met, such as the customer considering the failure not to be serious, and to be out of the company's control.[4]